BAWAG Group AG · VIE:BG
BAWAG — Q2 2019 Earnings Presentation
27 slides from BAWAG's earnings presentation, Jul 30, 2019
Slide 1: Q2 2019 Earnings
Q2 2019 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 30 July 2019 30 July 2019 | BAWAG Group AG 1
Slide 2: Q2 2019 Highlights and segment performance
Q2 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 30 July 2019 | BAWAG Group AG 2
Slide 3: Highlights Q2 2019
Highlights Q2 2019 Well on track to meet full year targets Delivered strong earnings ... Q2 ‘19 Profit before tax (PBT) of €160m (+5%), net profit of €122m (+4%), EPS of €1.23 (+6%) … H1 ’19 PBT of €287m (+6%), net profit of €219m (+8%), EPS €2.21 (+9%) Executing on our strategy ... Concept 21 on pl
Slide 4: Financial performance
Financial performance Key highlights € millions Q2 ‘19 vPY vPQ H1 ‘19 vPY H1 ‘19 2019 Targets Core revenues 291 + 6% +1% 578 +4% CIR 42.9% <43% Operating income 313 + 10% +5% 611 +5% Cost-income-ratio Operating expenses (136) +9% +8% (262) +3% Risk costs (15) >100% +29% (27) +31% RoTCE Return on Tan
Slide 5: Capital development
Capital development Strong cash / capital generating business model Capital generation Capital deployment +60bps gross capital generation during Q2 ‘19 • BFL Leasing GmbH and Health Coevo AG closed in May • H1 ‘19 dividend accrual based on dividend 14.9% 0.6% (0.4%) 15.1% policy of 50% net profit at
Slide 6: Retail & SME
Retail & SME Financial performance Customer development € millions Q2 '19 Q2 '18 Q1 '19 vPY vPQ € millions Q2 '19 Q2 '18 Q1 '19 vPY vPQ Net interest income 156.8 141.9 147.0 11% 7% Housing loans 9,087 8,583 9,073 6% - Net commission income 60.5 60.1 61.6 1% (2%) Consumer and SME 4,846 4,141 4,184 17
Slide 7: Retail & SME strategic & operational initiatives
Retail & SME Strategic & operational initiatives Austria Germany/Switzerland Q1 ‘19 Continued transformation momentum • MediaMarktSaturn Austria … successfully launched in Q1 ‘19 • Banking platforms … continued progress in Südwestbank, • METRO Cash & Carry Austria … POS access to customers start:bau
Slide 8: Corporates & Public
Corporates & Public Financial performance Customer development € millions Q2 '19 Q2 '18 Q1 '19 vPY vPQ € millions Q2 '19 Q2 '18 Q1 '19 vPY vPQ Net interest income 61.3 59.7 64.7 3% (5%) Corporate lending 6,474 7,257 6,393 (11%) 1% Net commission income 10.1 12.0 11.6 (16%) (13%) Asset backed lending
Slide 9: Detailed financials
Q2 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 30 July 2019 | BAWAG Group AG 9
Slide 10: P&L & key ratios
P&L & key ratios P&L | € millions Q2 ‘19 vPY vPQ H1 ‘19 vPY Key ratios Q2 ‘19 vPY vPQ H1 ‘19 vPY Net interest income 220.6 9% 3% 435.1 6% Return on Common Equity 13.0% (0.1pts) 2.7pts 11.9% 0.3pts Net commission income 70.0 (2%) (3%) 142.6 (2%) Return on Tangible Common Equity 15.3% - 3.3pts 13.8% 0
Slide 11: Balance sheet
Balance sheet Continued focus on balance sheet optimization and growing our customer business Balance sheet | € billions Q2 ’19 Q1 '19 Delta Q4 ’18 Delta Capital & RWA | € billions Q2 ’19 Q1 19 Delta Q4 ’18 Delta Customer loans 31.1 30.2 3% 30.5 2% Common equity 3.7 3.8 (3%) 3.7 - Securities and bon
Slide 12: P&L details – core revenues
P&L details – core revenues Stronger net interest income balancing softer net commission income Core revenues Summary € millions NII NCI NIM Net interest income (NII) +3% vPQ … net interest margin (NIM) at 2.30% 2.15% 2.28% 2.25% 2.26% 2.30% ‒ First-time consolidation of German acquisitions ‒ Positi
Slide 13: P&L details – operating expenses
P&L details – operating expenses Operating expenses Summary € millions OPEX Cost-income ratio Q2 ‘19 cost-income ratio at 43.5% … H1 ’19 cost- income ratio at 42.9% … in line with 2019 target 43.9% 47.1% ‒ Q2 ‘19 cost base reflecting first-time consolidation of 42.4% 42.4% 43.5% German acquisitions
Slide 14: P&L details – risk costs
P&L details – risk costs Proactive risk management to maintain conservative risk profile Risk costs Summary € millions Risk costs Risk costs / average interest-bearing assets Q2 ‘19 risk cost ratio at 16bps … business focused on developed markets … 72% DACH region and 28% 12bps 14bps 13bps 16bps Wes
Slide 15: Regulatory Capital
Regulatory Capital Continued strong capital generation … M&A closing CET1 Capital (FL) Key developments € billions CET1 capital (FL) CET1 ratio (FL) Total capital ratio • Earnings generating ~60bps capital in Q2 ‘19 17.2% 18.7% 18.9% • Q2 earnings mostly offset by closing of German 17.2% 16.3% acqui
Slide 16: Normalized P&L / RoTCE performance
Normalized P&L / RoTCE performance Profit before tax (PBT) Regulatory charges € millions • Regulatory charges front-loaded in Q1 … impact on 160 153 160 153 143 153 146 143 151 quarterly profit and return ratios 132 127 117 • €34m regulatory charges included in Q1 profit before tax … ~85% of total r
Slide 17: Targets
Targets On track to meet Full Year targets Metrics 2019 2020 Profit CAGR >6% >6% before tax Absolute >€600m >€640m Cost-income ratio <43% <40% Return on 15% to 20% Tangible Common Equity CET1 ratio (FL)1) 12% to 13% Earnings per share (EPS) pre tax >€6.00 >€6.40 before capital actions post tax >€4.5
Slide 18: Group Overview & Strategy
Q2 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 30 July 2019 | BAWAG Group AG 18
Slide 19: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT TARGETS One of Austria‘s leading retail banks with Focused on organic and Metrics 2019 2020 2.5 million customers & solid market shares inorganic growth Profit CAGR >6% >6% FY ’18: €573m profit before tax … €437m net profit before tax Absolute >€600m >€
Slide 20: H1 '19 Results
H1 ’19 Results Strong fundamentals across the Group PROFITABILITY CAPITAL RISK €287m 15.1% 1.8% Profit before tax (+6% vPY) CET1 Ratio NPL ratio 14% 16.6% 1.2% Return on Tangible Tier1 ratio NPL ratio excluding City of Linz Common Equity 43% 18.9% 14bps Cost-income ratio Total capital ratio Risk-cos
Slide 21: Strategy pillars of our growth strategy
Strategy 4 pillars of our growth strategy Growing in our Making our Drive efficiency thru Maintaining a safe and core markets customers’ lives easier operational excellence secure risk profile • Our core market is Austria and • Execute on Concept 21: • Our DNA is to focus on the things • Our busines
Slide 22: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence Increased profitability … KEY METRICS Pre-tax profit (€ millions) >640 2012 2013 2014 2015 2016 2017 2018 +€550m >600 573 RoTCE 3% 11% 15% 16% 17% 15% 14% 500 419 445 RoTCE 1% 8% 14% 16% 19% 18% 17% 316 (@12% CET1)
Slide 23: Business segments
Business segments Developing towards a Retail & SME franchise in the DACH region Retail & SME Business Corporates & Public Business Focus on 2.5 million • current accounts • auto and • Focus on developed markets … DACH region, Western Europe & the United States • Disciplined & conservative corporate
Slide 24: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Acquisition track record Recent developments Closed ✓ Continued focus on companies within the DACH region, €0.1b assets, Q2 ’19 €1b factoring often with Balance Sheets within a range of €1-10b Closed new vo
Slide 25: 2019 – 2020 Plan
2019 – 2020 Plan Key business drivers BASIS FOR >6% PBT GROWTH TARGETS NOT FACTORED IN TARGETS 1 2 3 4 5 6 Grow core retail products Proactive move Drive efficiencies through Maintain fortress Pursue M&A growth … Interest rate sensitivities … in Austria … niche player towards technology process & br
Slide 26: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 27: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations After-tax earnings per share (‘EPS‘) Pre-tax earnings per share Net profit / weighted average number of shares outstanding (diluted) Profit before tax / weighted average number of shares outstanding (diluted) B/S leverage Total assets / IFRS equity Pro-forma CET